E = mc2 with real KPIs

Author: Daan van Beek
Senior KPI specialist

Table of Contents

KPIs affect profits, customer & employee satisfaction

The difference between genuine key performance indicators (KPIs) and no KPIs (or false KPIs) is night and day when you look at Einstein’s special theory of relativity. Genuine KPIs (E) directly impact the three most important result areas of the organization (mc²): profit, employee satisfaction, and customer satisfaction. Normal (performance) indicators like revenue or profit margins don’t directly impact all three of these, or only do so with a greatly delayed effect. Take, for example, the phenomenon of college dropouts. Students who enroll for higher education, but quit after a year or two, before finishing their studies. How do drop-outs directly impact profitability, customer (student) satisfaction, and employee satisfaction?

1. School dropout: direct impact on profits

Public colleges in the Netherlands receive a budget per student. They only get a part of the budget when the student successfully completes their degree. When the student drops out, the school doesn’t receive the entire budget, despite their costs in areas like housing and personnel. Drop-out rates thus directly impact the organization’s profitability.

2. School dropout: direct impact on the customer

A student that drops out is probably not satisfied, for any number of reasons. Maybe the course was above their level, or the student didn’t get the guidance they needed, or they had a problematic home situation, or the material was too dull. Usually, it’s a combination of factors. Dropping out is the biggest cause of (very) dissatisfied students. With the right degree, young adults have much better perspectives on their future employment.

3. School dropout: direct impact on the employee

The college staff is, ideally, passionate about preparing students for their future careers. A student who drops out early disappoints both the teachers and other staff. They’ve invested time and resources into the student, but didn’t get the reward and satisfaction of seeing them graduate. Needlessly high drop-out rates negatively impact employee satisfaction, because it signals a collective failing of their mission.

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Learn how to manage more effectively

Using KPIs allow you to more accurately target the goal of reducing dropout rates. That KPI also offers opportunities to structurally improve processes, approaches, and cooperation between schools and municipalities within a region.

The formula E = mc²

The focused efforts (E) of schools in enabling students to succeed and enter the labor market with a good degree translates directly into positive results in multiple areas (mc²). Do you want to start using genuine KPIs? Order the SMART KPI Toolkit 2024. This practical handbook contains dozens of examples, exercises, and explanations to help you define the most essential KPIs for your organization, no matter which industry you operate in.

Consult our experts

Take advantage of our years of experience. Our KPI consultants are eager to help you define the factors that really matter to your organization. Contact us freely for a sparring session.

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